Social Media Screams “Sell” As Bitcoin Crashes To $54,000: Buy Signal?
05 Julho 2024 - 5:00PM
NEWSBTC
Data shows users on social media platforms have been calling to
sell Bitcoin after its latest crash, a signal that contrarian
traders may be waiting for. Bitcoin Sentiment On Social Media Has
Turned Quite Bearish According to data from the analytics firm
Santiment, social media is showing historic levels of FUD amid the
market drawdown. The indicator of interest here is the “Social
Volume,” which basically tells us about the degree of discussion
around a given topic or term that users on the major social media
platforms are currently participating in. This metric works by
going through posts/threads/messages on these platforms to look for
mentions of the keyword. The indicator then counts up the number of
posts that contain at least one such mention. Related Reading:
Bitcoin Traders Sink Into ‘Fear’ As Price Crashes Below $58,000 The
reason the Social Volume doesn’t simply count up the mentions
themselves is that mentions alone don’t contain any information
about if the trend is being followed across social media as a
whole. Sometimes, for example, mentions can be high for a topic,
but most of them could be limited to niche circles (that is, inside
a few posts). The Social Volume naturally wouldn’t spike in this
case, but it would when users across the platforms are making posts
about the term. Now, what the analytics firm has done here is that
it has applied terms related to sentiment to Social Volume, to
differentiate between discussions related to positive and negative
sentiments. Here is the chart shared by Santiment that shows how
the Social Volume for negative and positive sentiments has changed
alongside the recent Bitcoin volatility: To discern the sentiment,
the analytics firm has chosen terms such as buy, bottom, and
bullish in the case of positive sentiment, and sell, top, and
bearish for negative sentiment. From the graph, it’s visible that
the Social Volume for the latter type of keywords has observed a
huge spike alongside the plunge in the Bitcoin price. This would
imply that a large amount of bearish posts have popped up on social
media. The indicator has also spiked for terms pertaining to
positive sentiment, but clearly, the scale has been lesser than the
one for bearish terms. In fact, the latest ratio between sell and
buy calls has actually been the largest observed in the year so
far. Thus, it would appear that social media users as a whole are
feeling FUD towards Bitcoin. This may actually be a positive
development for the cryptocurrency, however, as its price has
historically been more likely to move in the opposite direction to
what the crowd expects. Related Reading: Why Did Bitcoin Plunge
Under $58,000? On-Chain Data Says This As is apparent in the chart,
buying calls had spiked on a few occasions following price plunges
in the past month, but this optimism had only led to a continued
decline for the asset. With the latest crash, sentiment appears to
have finally flipped, with Bitcoin traders starting to give up.
“For bold traders, this is a window that some may wish to be a true
contrarian and buy into the crowd’s anger and frustration,” notes
Santiment. BTC Price Bitcoin had briefly slipped under the $54,000
level during the plunge, but the asset appears to have bounced back
to $55,400 since then. Featured image from Dall-E, Santiment.net,
chart from TradingView.com
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